What is a large investment? Is it seven figures for a ranch? Is it six figures for a piece of iron? Is it four figures for a cow?
For me, years ago it was $500 for a marketing school. I think it was Ben Franklin who said, “Knowledge pays the best interest,” and investment legend Warren Buffet said, “Invest as much in yourself as you can, because you are your greatest asset.” My opening questions were a little silly but now I am going to ask a serious one. How does anyone think they are going to pay for that seven-figure ranch if they can’t market cattle well?
Here’s why I am bringing this up: The money the Coronavirus Food Assistance Program (CFAP) is paying out seems to have settled people down, and satisfied them. Dissatisfaction is the creative state. Think about it, if we are dissatisfied we will do something about it. If we are satisfied we will not change anything. This CFAP money is a band aid. It may smooth things out this time, but the market will remain volatile into the future. What then? Are we going to continue to cry out for more band aids, or are we going to learn how to successfully market cattle in challenging times?
Why not take a small portion of that CFAP money and invest it in yourself. With coronavirus restrictions being lifted there will be marketing schools again. Last week I talked a bit about grazing. There are some good books on that topic, and ranching in general. With the knowledge gained, next time something like CFAP comes around it will not be getting you through a rough spot it will be a bonus check.
This week I saw some numbers on the economy. There were some big drops in those numbers, and the authors of those articles made some scary comparisons to the Great Depression. Then I remembered that there were some people who made fortunes during those times. Snapping back to today I have friends who made more money the last couple months than they ever had. My friends have no idea the economy is supposed to be bad. It’s like financial instructor Dave Ramsey says, focus on your own personal economy.
The cattle markets were much the same way, some people crushed it and some people got crushed. Knowledge and skill are what separated them. While most people were reluctant sellers, the skilled marketers were willing sellers because they saw the opportunities.
It’s become a theme on this blog that the market is trying to help us, and I firmly believe it is. I also know that the market has a mysterious way of hammering us for two things, fear and greed. Knowledge replaces fear -- it takes effort and discipline to study and acquire it. Maturity and discipline are the only two things I can think of that will stifle greed, and I think that comes from the experience of getting hammered for being greedy.
With the short week and the beginning of summer sale schedules, market information is a tad light this week. With some sales having smaller runs this week buyer interest softened at those sales, while at other sales that had good volume the markets were a bit higher. To me this week it wasn’t a matter of whether the market was a bit higher or softer. It was how the price relationships between weights and classes changed. This is important because these relationships are the things that allow us to make margins. The value of gain (VOG) seems to be a yo-yo right now. Two weeks ago I wrote that it looked like we were getting back to being a weight-gain business again, then last week came along and erased that. This week the VOG was better. This moved some of the heavier feeders into an overvalued state.
With fats remaining steady, their price relationship compared to the heavy feeders is still providing a great opportunity to sell them and make a profitable replacement buy.
This week unweaned cattle were $6-19 back, and feeder bulls were $15-30 back. What a value adding opportunity that is. Replacement quality heifers caught a $5 premium. Southern cattle were slightly under-valued to plains markets.
The opinions of the author are not necessarily those of Beef Producer or Farm Progress.